Aetna 2013 Annual Report Download - page 48

Annual Report- Page 42
for increasing its RBC to the domiciliary state insurance commissioner, to mandatory regulatory intervention
requiring a company to be placed under regulatory control in a rehabilitation or liquidation proceeding. At
December 31, 2013, the RBC level of each of our insurance and HMO subsidiaries was above the level that would
require regulatory action.
In addition, changes to regulations or the interpretation of those regulations due to regulators' increasing concerns
regarding insurance company and/or HMO solvency due, among other things, to the current adverse and uncertain
economic environment, could negatively impact our business in various ways, including through increases in
solvency fund assessments, requirements that the Company hold greater levels of capital and/or delays in approving
dividends from regulated subsidiaries.
For information regarding restrictions on certain payments of dividends or other distributions by our HMO and
insurance company subsidiaries, refer to Note 16 of Notes to Consolidated Financial Statements on page 129.
The holding company laws for the states of domicile of Aetna and certain of its subsidiaries also restrict the ability
of any person to obtain control of an insurance company or HMO without prior regulatory approval. Under those
statutes, without such approval (or an exemption), no person may acquire any voting security of an insurance
holding company (such as our parent company, Aetna Inc.) that controls an insurance company or HMO, or merge
with such a holding company, if as a result of such transaction such person would control the insurance holding
company. Control is generally defined as the direct or indirect power to direct or cause the direction of the
management and policies of a person and is presumed to exist if a person directly or indirectly owns or controls
10% or more of the voting securities of another person.
Audits and Investigations
We typically have been, are currently and may in the future be involved in various governmental investigations,
audits, examinations, reviews, subpoenas and other requests for information, the intensity and scope of which
continue to increase. These include routine, regular and special investigations, audits, examinations and reviews by,
as well as subpoenas and other requests for information from, CMS, HHS, various state insurance and health care
regulatory authorities, state attorneys general and offices of inspector general, the CCIIO, the OIG, the OPM, the
DOL, committees, subcommittees and members of the U.S. Congress, the DOJ, the FTC, U.S. attorneys and other
state, federal and international governmental authorities. For example, certain of our Medicare Advantage plans are
currently under review for, among other things, compliance with coding and other requirements under the Medicare
risk adjustment model, and our Commercial business will be subject to audits related to risk adjustment and
reinsurance data when those Public Exchange programs are implemented starting in 2014. Such government actions
may, among other things, prevent or delay us from implementing planned premium rate increases and have resulted
and may result in restrictions on our business, changes to or clarifications of our business practices, retroactive
adjustments to premiums, refunds to members or the government, payments under insurance policies prior to those
payments being due under the terms of the policy, assessments of damages, civil or criminal fines or penalties
(including under the False Claims Act), or other sanctions, including the possible loss of licensure or suspension or
exclusion from participation in government programs. For example, effective April 2010 through June 2011, CMS
imposed intermediate sanctions on us suspending the enrollment of and marketing to new members of all Aetna
Medicare Advantage and Standalone PDP contracts. In addition, CMS has instituted RADV audits of our risk
adjustment payments under certain of our Medicare Advantage contracts. For additional information on these
Medicare matters, refer to “Medicare” beginning on page 38.
Over 35 states are investigating life insurers' claims payment and related escheat practices. For additional
information on these life insurance matters, refer to “Life and Disability Insurance” beginning on page 45.
Refer to “Litigation and Regulatory Proceedings” in Note 18 of Notes to Consolidated Financial Statements
beginning on page 130 for more information regarding pending audits and investigations.